Nuclear subsidy 'by the back door'

Electricity market reforms are being used as a cover for subsidising the nuclear industry, MPs have claimed.

A report by the Commons' energy and climate change committee published today warns that government proposals will effectively provide subsidies to nuclear generators - despite the coalition agreement only permitted new nuclear power stations "provided they receive no public subsidy".

It claims new long-term contracts and a carbon price floor which could hand them windfall profits are undermining changes to the electricity market, which is dominated by six large energy firms.

"Ministers believe that new nuclear could play a key role in keep the lights on and meeting our climate change targets-but they don't want to own up to supporting it," committee chair Tim Yeo said.

"This is understandable given the promise they made not to subsidise nuclear, but it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face."

The Lib Dems are staunchly opposed to new nuclear energy and negotiated an option to abstain on the issue as part of the coalition agreement.

Energy secretary Chris Huhne has appeared happy to accept the development of new nuclear power stations, however, prompting the committee suspicions about a ministerial enthusiasm for subtle backing for the nuclear industry.

"The government must be up front about the support it is giving to nuclear and not hide subsidies in a one-size-fits-all design for long-term energy contracts," Mr Yeo added.

MPs accused ministers of "tinkering at the margins" on electricity market reform, despite coming up with excessively complicated plans.

Environmental charity Friends of the Earth called on the government to decarbonise its grid by 2030.

"This report shows the government's plans are stacked in favour of nuclear power over renewable energy and are so vague they risk locking the UK into a new generation of polluting fossil fuels," senior economy campaigner Simon Bullock commented.

"David Cameron must heed the advice of its own green advisor and commit to decarbonising UK electricity by 2030 - standing firm against opposition from dinosaur departments like the Treasury.

"We don't need to gamble on new nuclear power - by boosting green energy alternatives and slashing energy waste we can tackle climate change and create new jobs."